NASD Cautions Banks
On 'Spinning' Hot Shares

NEW YORK -- The National Association of Securities Dealers warned investment banks that allocating hot new stocks to venture capitalists in many instances violates its regulatory rules.

In a "member alert," distributed Friday to the syndicate and compliance departments of more than 5,000 firms, the Wall Street self-regulator gave its clearest indication that investment banks could be held liable for allocating shares of hot...